Worried About China? Keep Calm as Markets Return to Earth

China’s stock market crash and the international volatility set in motion have again put the world on edge. Analysts vie to predict what comes next. According to the noted economist Paul Samuelson, the stock market has predicted nine of the last five recessions. His point: There is often little or no relationship between stock prices and the real economy. Even after a stomach-churning week of jagged movements, the US stock market index S&P 500 is 10 percent below its recent high and up 37 percent from three years ago. In China, where the volatility has been higher, the Shanghai index, 2288 a year ago, is above 3100 now, a gain of near 40 percent – though it dropped 40 percent from its peak in June.

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